Issues at Port of Oakland

We thought the woes on the West Coast were over, but apparently not. Two months after the International Longshore and Warehouse Union contract was approved by the union membership and the Pacific Maritime Association, the Port of Oakland is a mess, with labor issues causing extensive delays for truckers and shippers, which is resulting in cargo diversions to Southern California.

Employers point to a shortage of tractor drivers, who shuttle containers within the terminals as the symptom. Why these ILWU Local 10 members refuse to show up for this work is a mystery.

“The position that is not being filled is the tractor drivers. We’re going to meet with the international (union) to talk about it,” PMA President Jim McKenna said.

Driving the yard tractor, sometimes referred to as a UTR or “bomb cart,” is one of the most basic jobs on the waterfront. The tractors are used to carry containers from the ship-to-shore cranes to the container stacks in the yard.

Dozens of tractor drivers are employed each day at all West Coast ports, but Oakland is the only port on the coast where the ILWU does not allow part-time longshoremen, known as casuals, to work those jobs. As a result, employers’ daily orders for work gangs are being filled only partially, or not at all.

McKenna said the average longshoreman in Oakland works 4.4 days per week, but in Los Angeles-Long Beach it’s more than five days per week. The 13 container terminals in Southern California work night and weekend shifts as well as the standard 8 a.m. to 5 p.m. Monday through Friday shifts, and they usually fill or come close to filling all of their orders for gangs. A big difference in Southern California is that as much as 50 percent of the work force any given day is comprised of casuals, whereas in Oakland it’s about 12 percent.

The ILWU and PMA recently agreed to promote 100 casualsto registered status. McKenna said it takes six to eight weeks to choose the workers, perform the drug and alcohol testing and train them. He said the first 20 longshoremen have just finished the process and 20 more will be phased in each week until all 100 are on the job.

Some employers believe the ultimate solution is for the ILWU in Oakland to agree to allow casuals to drive yard tractors, so any shortfall beyond the registered work force can be filled each day by casuals.

Truckers, who are spending hours waiting in line at congested terminals, and their shipper customers, don’t care how the PMA and ILWU agree to provide more labor, but they say it must happen immediately or their businesses will suffer irreparable harm and diverting to other ports will be an attractive option.

Cargo interests are paying a dear price because of the delays. Exporters of high-value cargoes like almonds see their loads valued at more than $200,000 sitting idle, unless they can be diverted, at a higher inland transportation cost, to Southern California. Shippers of low-margin cargoes like rice cannot absorb the higher inland costs, so their shipments are stuck until the terminals in Oakland are de-congested and vessels are back on schedule, he said.

The Oakland trade and transportation community, already disheartened by the sinking reputation their port sustained during the protracted and contentious ILWU contract negotiations this past year, fear the current round of delays, congestion and labor issues will cause a permanent loss of cargo.

West Coast ports in the first half of 2015 saw their containerized imports decline 5 percentage points, to 50 percent of total U.S. imports, while East Coast ports experienced a 3 point increase, according to PIERS, a sister company of JOC.com within IHS Maritime & Trade.

Diversion of West Coast cargo could accelerate in the coming year due to two events. The Panama Canal expansion project, which is scheduled for completion in April, will allow vessels of up to 13,000 twenty-foot container units to bypass the West Coast on all-water services from Asia to the East Coast.

Equally as troubling, while West Coast ports struggle with a reputation of unreliability and labor problems, the International Longshoremen’s Association and East Coast employers represented by the United States Maritime Alliance this week indicated they intend to begin early negotiations, possibly this year, to extend the existing contract until 2025. ILA members, who have enjoyed more work, higher earnings and the prospect of large bonus checks at the end of the year because of cargo diversions from the West Coast, have been candid in telling cargo interests they want to send out a message of labor stability because they want their business.

Conversely, some ILWU locals on the West Coast have been sending out a different message. The PMA and terminal operator ICTSI in Portland have said since June of 2012 that hard-timing by ILWU Local 8 would eventually drive business away from the Pacific Northwest port. Earlier this year, Hanjin Shipping Co. and Hapag-Lloyd ended their services to Portland. Those carriers had accounted for 99 percent of Portland’s container volume.

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